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2025

2024

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  • Daiwa's Economic View - Next major political event on 8 Sep: Will LDP hold party leadership election?

    Daiwa's Economic View - Next major political event on 8 Sep: Will LDP hold party leadership election?

    3 September 2025 400 KB PDF
    • At the LDP’s 2 Sep joint plenary meeting, PM Ishiba announced his intention to remain in office; also indicated his intention to ask Secretary-General Moriyama, who had expressed his intention to resign, to stay in office
    • Next focus on whether LDP will hold extraordinary party leadership election (announcement expected on evening of 8 Sep)
    • If extraordinary LDP party leadership election shelved, market concerns over fiscal deterioration should ease; Once decision to hold election is made, caution regarding fiscal expansion would persist
  • Economic Commentary - Speech by BOJ Deputy Governor Himino: Focus on structural upside risks to inflation

    Economic Commentary - Speech by BOJ Deputy Governor Himino: Focus on structural upside risks to inflation

    2 September 2025 516 KB PDF
    • Three obstacles to next rate hike
    • Upside risks largely structural
    • Growing structural upside risks make Oct-Dec rate hike more likely
  • Daiwa's View - French crisis: Implications for government bonds in Japan and Europe

    Daiwa's View - French crisis: Implications for government bonds in Japan and Europe

    28 August 2025 884 KB PDF
    • Spreads on French government bonds widened after French Prime Minister Bayrou, who is leading fiscal consolidation, decided to call for confidence vote on 8 Sep
    • While vigilance regarding key events will be needed in the near term, if leeway for ECB’s rate cuts were to increase due to substantial tightening of FCI in Europe, that could provide good opportunity for investment in hedged foreign bonds
    • Meanwhile, USD-denominated asset swap spreads on superlong JGBs have tightened, suggesting no clear evidence of contagion from the French crisis
  • Daiwa's Economic View - What rising food prices suggest about future rate hike decisions

    Daiwa's Economic View - What rising food prices suggest about future rate hike decisions

    28 August 2025 537 KB PDF
    • The stickiness of food price increases is a crucial factor considered in rate hike decisions
    • While sharp rises in food prices are primarily driven by supply factors, there is a risk of prolonged supply shocks
    • Longer-term food price increases brought by climate change are another risk to consider
  • Daiwa's View - How far is the BOJ behind the curve?

    Daiwa's View - How far is the BOJ behind the curve?

    22 August 2025 832 KB PDF
    • Estimates based on the Taylor Rule suggest an appropriate policy interest rate range of 0.87% to 1.35%, indicating that the current 0.5% is far too low
    • If interest rate hikes are delayed further, the ultimate terminal rate is highly likely to exceed 1%, minimum level assumed by BOJ
    • If policy rate rises to 1.25%, the long-term yield is projected to reach the 2.1% range, implying that the current 1.6% is merely an interim level
  • Daiwa's Economic View - Upside risks to Japanese economy: Effects of fiscal package could mitigate downward impact from tariffs

    Daiwa's Economic View - Upside risks to Japanese economy: Effects of fiscal package could mitigate downward impact from tariffs

    19 August 2025 517 KB PDF
    • Our estimates of economic effects of cuts to gasoline tax, diesel fuel tax, and consumption tax, and stimulus payments
    • Fiscal programs currently under discussion could be large enough to substantially mitigate downward impact from tariffs
    • Attention should be paid to both downside risks from tariffs and upside risks from fiscal policies at home and abroad
  • Daiwa's Economic View - Apr-Jun GDP: Economy still resilient despite lingering uncertainties

    Daiwa's Economic View - Apr-Jun GDP: Economy still resilient despite lingering uncertainties

    15 August 2025 516 KB PDF
    • Japan's economy showed no impact from Trump's tariffs in Apr-Jun 2025, but be aware some may emerge from Jul-Sep 2025
    • We forecast real GDP growth of +0.0% q/q (+0.2% annualized) for Jul-Sep 2025
  • Daiwa's Economic View - Cabinet’s budget formulation authority threatened by opposition parties’ bill to cut gasoline tax

    Daiwa's Economic View - Cabinet’s budget formulation authority threatened by opposition parties’ bill to cut gasoline tax

    15 August 2025 387 KB PDF
    • Opposition parties’ bill to cut gasoline tax is likely to pass as ruling parties lack a majority in both upper and lower houses
    • If passed, the tax cuts would preempt the budget formulation authority inherently held by cabinet, undermining the foundation of parliamentary cabinet system
    • This would result in fiscal expansion without clear accountability, adding a new risk factor to the JGB market